I.

True or False
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10.
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12.
13.
14.
15.

16.
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30.
II.

The property left by the decedent without a will shall be transferred in favor of the government.
A free portion of the estate could be transferred to compulsory heir by virtue of a will.
Legitimate and illegitimate child has equal share under intestate distribution of the estate.
An adopted child has no equal rights with a legitimate child with regards to legitime .
Disinheritance can be effected only through a will wherein the legal cause must be specified
In case of doubt, testamentary succession is preferred over legal or intestate succession.
All properties of the decedent shall be included as part of the taxable estate.
Properties belonging to aliens are subject to Philippine estate tax only if located in the Philippines
In valuing shares of stocks not listed in the stock exchange, common shares and preferred shares are
valued at their book value.
The fair value at the time of death is considered for determining the value of the gross estate.
The interest revenue to be included as part of the gross estate must exist at the time of the decedents
death.
Proceeds of life insurance received by irrevocable beneficiary are subject to estate tax.
Under the Family Code, the property owned by the husband is called husbands paraphernal while the
property owned by the wife is called wifes capital.
Under the absolute community of property, jewelry will be part of the communal property.
Under the conjugal partnership of gains, the property belonging to each spouse before marriage shall be
treated as exclusive properties, but the income derived therefrom during marriage shall be conjugal
properties.
As a rule, a deduction is allowed from gross estate if it is proven that the estate of the decedent is
entitled to such deduction as provided by law.
The allowed deduction for funeral expense is P200,000
The amount of judicial expenses is P200,000 or 5% of the gross estate or the actual amount whichever is
the lowest.
Funereal expenses derived from assistance by sympathizers are deductible funeral expenses.
Standard deductions are in lieu of actual itemized deduction.
Casualty losses could be claimed as deduction from the gross income and from gross estate
Unpaid income taxes incurred before the death of the decedent are deductible from the gross estate
The maximum amount of deductible family home from the gross estate is P1,000,000.
Standard deduction should be substantiated with official receipts to be deductible from gross estate.
The allowable estate tax credit is the lower the limit set under the Tax Code or the actual estate tax paid
to foreign country.
Notice of death is designed to safeguard the payment of estate tax
Notice of death should be submitted to the BIR within two months from the date of death of the
decedent.
The BIR commissioner shall have the authority to grant, in meritorious cases, a reasonable extension not
exceeding 60 days for filing of estate tax return.
The Register of Deeds shall not register any deed or instrument covering the decedents estate or any
portion thereof until the taxes are shown to have been paid.
The first P500,000 of net taxable estate is tax exempt.

PROBLEM SOLVING (MULTIPLE CHOICE)

1. At what amount is allowed as ordinary deduction from P5,000,000 gross estate of a resident alien as
funeral expenses for P220,000 actual payment out of the estate for interment, burial lot and mourning
apparels?
a. P220,000
c. P200,000
b. P250,000
d. P0
2. Information regarding a Filipino Citizens gross estate and expenses are as follows:
Gross Estate
P3,000,000
Funeral Expenses
180,000
Judicial Expenses(40% use to settle dispute among heirs)
300,000
Bad Debts(1/2 unrecoverable)
200,000

3.

4.

5.

6.

7.

8.

9.

How much is the ordinary deduction?

a. P580,000
c. P430,000
b. P460,000
d. P550,000
Prior to date of death, a total of P450,000 medical expenses was incurred. At the date of death, P
100,000 of the medical expenses are still unpaid. How much of the above amounts could be deducted
from the gross estate?
a. P450,000
c. P500,000
b. P550,000
d. P350,000
A citizen died leaving P3,000,000 conjugal estate to his wife. The estate included the family home valued
at P800,000. The funeral expenses is P280,000. The share of the surviving spouse would be:
a. P1,000,000
c. P900,000
b. P1,400,000
d. P960,000
Ms Sisi Pi, a Chinese, residing in Mississippi during his lifetime, left the following properties:
House and Lot , USA
P10,000,000
Mansion, El Nido Palawan
50,000,000
Cars, Japan
2,000,000
Shares of stock, Hongkong
5,000,000
Accounts receivable, Davao
3,000,000
The gross estate of Ms Sisi Pi is:
a. P54,500,000
c. P53,000,000
b. P55,000,000
d. P70,000,000
What would be the amount to be included in the gross estate of the Kuhamo, a resident decedent, with
a 10% equity investment in SMB. Total book value of SMB before current income is P1,000,000,000.
Assume that prior to the death of Kuhamo, the net income of SMB is P50,000,000 and P20,000,000
dividend declared but received after the death of Kuhamo.
a. P105,000,000
c. P100,000,000
b. P102,000,000
d. P 5,000,000
Mr. Palikero presents the following properties and expenses to the BIR in relation to the death of his 6th
wife:
Revocable donation to her sister
P1,000,000
Family Home
1,000,000
Proceeds from life insurance from SSS
5,000,000
SSS death benefits
500,000
Benefits received under RA 4917
500,000
Transfer in contemplation of death
2,000,000
Donation to Educational Institution
1,000,000
Transfer for Public Use and Purpose
3,000,000
a. P5,500,000
c. P10,500,000
b. P8,500,000
d. P11,000,000
What would be the amount to be included in the net estate of a decedent whose collectible from a
debtor is P160,000 and the same debtor was subsequently declared by the court as insolvent for having
total liabilities of P400,000 and total properties of P50,000?
a. P20,000
c. P160,000
b. P140,000
d. P350,000
Bonus
For I know the plans that I have for you, declares the Lord, plans to prosper you and not to
harm you. Plans to give you hope and a future.
-Jerimiah 29:11

10. Bonus
For my thoughts are not your thoughts, neither are your ways my ways says the Lord. For as
the heavens are higher than the earth, so are my ways higher than your ways, and my thoughts than
your thoughts.
-Isaiah 55-8:9

III.

STRAIGHT PROBLEM: (10 points)

Mr. Nama Tay, a Japanese national who chose to live in the Philippines after marrying on October 14, 1987 a
Filipina died last January 1, 2013 due to a sudden cardiac arrest. He left the following properties to his family:
Family Lot, where the family home is located, acquired before his marriage

FMV
P
Cost
Assessed Value

Family home, erected after the marriage

FMV
Cost
Assessed Value

Other Real Properties:

Land in Laguna, received by his wife from the donation of her father
Land in Taiwan, purchased from his salary
Cars
Jewelries
Cash
Rent from the Land in Laguna leased to a partnership
Claims from an insolvent debtor (40% uncollectible included)
Stock, Options and Bonds in:
Domestic Corporation, 10,000 ordinary shares traded in the PSE

Foreign Corporation with business situs, 15,000 ordinary shares not traded in
PSE

Foreign Corporation operating in Singapore, 10,000 preference shares

500,000
200,000
400,000
800,000
500,000
1,000,000

1,000,000
2,500,000
800,000
700,000
1,500,000
400,000
600,000
Highest Price
Lowest Price
Book Value
Par Value
Highest Price
Lowest Price
Book Value
Par Value
Highest Price
Lowest Price
Book Value
Par Value

120
115
118
100
50
35
40
20
250
300
200
180

Proceeds from life insurances:

irrevocable beneficiary is his wife
irrevocable beneficiary is his estate
revocable beneficiary is his wife
Death benefits from SSS
Amounts Received from RA 4917

100,000
200,000
300,000
50,000
1,000,000

During his burial and the settlement of his estate, the following expenses and losses were incurred:
Funeral Expenses
Judicial Expenses
Incurred during the first 3 months after his death
Incurred during the next 3 months after his death
Incurred during the third 3 months after his death
Incurred during the fourth 3 months after his death
His car was loss in an accident
His Land in Taiwan also has an unpaid mortgage of
He donated cash to the Government for public purpose
Medical Expenses
Paid Within one-year before his death
payable within one-year before his death

250,000
40,000
50,000
20,000
10,000
1,000,000
200,000
400,000
150,000

Compute for the following items in his estate tax return, kindly present computation in good form:
a.
b.
c.
d.

Total Gross Estate

Total Allowable Deduction
Share of the Surviving Spouse
Taxable Net Estate